$
ROADMAP
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PLANNING
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VALUES
MEANING
LIABILITIES
NUMBERS
HELPING
ASSETS
$
TAX
SAVINGS
ASPIRATIONS
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BY MA RK A STRI NOS, C PA / PFS, C FP, RLP
art
heart
science
Life Planning
m
A More Personal
Approach to Finance
Many CPA financial planners can set themselves apart in this profession by combining two skills:
working with numbers and helping people. The typical client engagement is all too familiar: A client
approaches you with his or her issue, such as a down payment for a vacation home. Being the financial
doctor you are, you collect details of the client’s financial life: assets, liabilities and cash flows, then spend
hours crafting the perfect plan with various scenarios and articulate the results to the client.
You and the client both have a sense of accomplishment because you quantified a tangible goal and
your spreadsheet supports it. But what if your plan is missing something? What if you set your client
down the wrong path? Or perhaps even more common: What if the client never followed through with
the plan you created?
Traditionally, financial planners have focused on the quantitative side of the equation—such as
taxes, investments, insurance and estate planning—while underestimating the impact of the qualitative
side. Some financial planners have a discovery process to learn about their clients’ goals and values, but
without a certain qualitative finesse, these inquiries elicit vague, boilerplate responses.
While the quantitative projections are incredibly important to the success of any financial plan, the
qualitative side may be even more critical to transforming success on paper into reality. Advisers must
have a deep understanding of their clients’ life goals, personal values, fears and approach to money.
Leading the way is a new breed of life-centered, financial professionals who are helping clients realize
purposeful lives using money as the tool.
What Is Financial Life Planning?
Life planning starts with a basic premise: An adviser should first discover the client’s goals and aspirations
before developing financial recommendations. Seems simple enough, right? The DOL fiduciary rule is
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11
Life Planning
A More Personal Approach to Finance
leading the industry in this direction. However, life
planning is further rooted in the belief that every
person strives to live a meaningful and purposeful life.
As such, life planning focuses on the human side of
financial planning to discover a client’s deepest
and most profound goals through a process
of structured and non-judgmental inquiry.
Using a mix of professional and advanced
relationship skills, life planning inspires clients
to pursue their aspirations, resolve obstacles
through discussion, create a concrete financial
plan and provide ongoing guidance as clients
accomplish their objectives.
Like traditional financial planning, life
planning builds a roadmap for clients with asset
allocation models, estate planning advice and
tax savings opportunities. However, because
the client’s “life” serves as the foundation of
the plan, the advice is often very different from
what a traditional financial planner would give.
The life plan integrates human capital,
such as the client’s time, energy and skills. The
end result reflects the clients’ lives on a deeper
and more meaningful level.
art
heart
science
plan, perhaps finding creative ways for the client to
spend more time with their family, such as renting a
vacation home or cutting back hours at work.
Before assigning dollars, dates and deadlines, you
need to take a step back and identify the real
“why” behind your client’s goals.
For most financial advisers, the skills needed
to apply the principles of appreciative inquiry and
positive psychology are not intuitive. Further, this
type of training is rarely part of university level
programs. Fortunately, there are tools that can
assist financial planners who want to improve or
expand their existing skillset.
For example, the Kinder Institute of Life
Planning trains advisers on how to implement a
process that includes a series of three open-ended,
thought-provoking questions to explore what an
ideal, inspired life would include. Their process
then takes you through exercises designed to help
the planner and client focus and prioritize. Other
trainings like Money Quotient and Mitch Anthony
provide similar tools.
Life planning
starts with a
basic premise:
An adviser should
first discover the
client’s goals and
aspirations before
developing financial
recommendations.
Seems simple
enough, right?
How to Transform Conversations
Market surveys consistently include CPAs as
a profession that society highly trusts, which
is a distinct advantage. Although advanced
technical skills and public perception provide an excellent basis for
CPAs to succeed, we can increase our odds of success by taking a
deeper look into the lives of our clients.
While the emergence of life planning may seem like a new
phenomenon, its foundation is supported by decades of research in
the field of organizational change known as “appreciative inquiry.”
Developed by David Cooperrider at Case Western Reserve University,
appreciative inquiry focuses on the positive aspects of our lives and
leverages them to make changes happen.
One simple technique is to ask your client, “What would your ideal
life look like in five years” and have them describe this in detail. Instead
of looking for what is wrong, financial planners should recognize a
client’s strengths and aspirations, an approach that has proven to be an
effective way to inspire clients to make meaningful change in their lives.
Further support for this process is evidenced by the study of positive
psychology, which explores healthy lives, marriages, organizations
and communities. Martin Seligman of the University of Pennsylvania
Positive Psychology Center summarizes his theories on happiness and
well-being in three categories: positive emotions, engagement and
meaning—all of which contribute to a consummate human experience.
Understanding and consistently delving into these three dimensions
will allow financial planners to help create a more meaningful life
experience for their clients.
The questions we ask are just as important as our perspective.
Professionals trained in life planning ask what is the goal of the goal.
In the earlier example, perhaps it wasn’t the vacation home that the
client wanted. What if further digging revealed that what the client
really wanted was more quality time with family? If the client followed
the original financial plan, you could actually be directing them further
from their life goal. A life planner may have created a very different
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Why?
Focusing on numbers alone is not sufficient.
Integrating life planning into your practice is
a way to bring more meaning to the financial
planning you’re already doing. Life planning is
simply financial planning that gives clients an
integral role in the planning process. No longer are they only coming
to you for answers, but they are now equals in planning and problem
solving, often coming up with creative solutions themselves.
As a result, clients are more likely to have a stronger sense of
commitment to the plan because it now serves as the architecture to
support the life that they want to live. This will be critical during those
times in life (or the financial markets) that require a course correction.
Why not give the client a roadmap that inspires and motivates them?
Does your financial plan do that? If it doesn’t, then perhaps it’s time to
inject some passion into the numbers and re-evaluate your process.
The life planning process is in complete alignment with the
professional standards regarding getting to know your client. One can
argue that integrating elements of life planning is actually exercising
your fiduciary duty. Without understanding people’s beliefs, background
and attitudes about money, how can a planner do a thorough job of
preparing a plan that the client will own?
The most important benefit of life planning can be understood
through the lens of risk. A simple online search will yield thousands
of results ranging from interest rates, inflation, investment returns
and longevity among many others as the most prominent risks to a
financial plan. But risk can rear its head in unexpected ways. “The
Top Five Regrets of the Dying,” a book which chronicles the wisdom
of numerous people in their final days, gives insight into the most
important risk factor: Failing to live a life true to oneself.
The greatest risk in financial planning will not be found in the
numbers we’ve been trained to understand, but rather in the questions
we did not know to ask.
Mark Astrinos, CPA/PFS, CFP, RLP is a financial planner and
investment adviser. You can reach him at [email protected].
and provided for personal use only - not for reproduction or retransmission.
For reprints please contact the Publisher.
www.calcpa.org